Case Summary:
Creditor filed an adversary proceeding seeking to determine the dischargeability of his debt. After a trial on the merits, the Court dismissed the case. Debtor’s counsel filed a motion for attorney fees pursuant to 11 U.S.C. § 523(d). While the legal and factual positions taken by the Creditor to litigate the dischargeability (of what the Court determined to be a consumer debt) were not substantially justified, special circumstances existed to deny the motion. Attorney fees under § 523(d) are only allowed for defending § 523(a)(2) claims. In this case, the amount of resources devoted to defending the § 523(a)(2) action was likely small and the related fees de minimis and hard to determine. Accordingly, the Court found awarding the entire amount requested would be unjust.
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Opinions
The Western District of Wisconsin offers a database of opinions for the years 1986 to present, listed by year and judge. For a more detailed search, enter a keyword, statute, rule or case number in the search box above.
Opinions are also available on the Government Printing Office website for Appellate, District and Bankruptcy cases. The content of this collection dates back to April 2004, though searchable electronic holdings for some courts may be incomplete for this earlier time period.
For a direct link to the Western Wisconsin Bankruptcy Court on-line opinions, visit this link.
Available Decisions:
- Chief Judge Catherine J. Furay -- 2013 - present
- Judge William V. Altenberger -- 2016 - present
- Judge Rachel M. Blise -- 2021 - present
- Judge William H. Frawley -- 1973 - 1986
- Judge G. Michael Halfenger -- 2020 - present
- Judge Beth E. Hanan -- 2023 - present
- Judge Brett H. Ludwig -- 2017 - 2020
- Judge Thomas M. Lynch -- 2018 - present
- Judge Robert D. Martin -- 1990 - 2016
- Judge Katherine M. Perhach -- 2020 - present
- Judge Thomas S. Utschig -- 1986 - 2012
Judge Robert D. Martin
Case Summary:
The Chapter 7 Trustee objected to the Debtor’s amended claim of exemptions shortly after the reopening of the case. The Trustee asserted that the exemption claim was filed in bad faith. At issue was the Bankruptcy Courts’ authority to deny bad faith exemptions. The Court found that the Supreme Court clearly opined in Law v. Siegel, 134 S.Ct. 1188 (2014), that bankruptcy courts do not have authority to deny a federal exemption on a ground not specified in the code. Thus, the Court could not reach the merits of the trustee’s objection because there is no codified bad faith prohibition on exemption amendments.
Statute/Rule References:
11 U.S.C. § 502(a)
Key Terms:
Bad Faith
Case Summary:
At issue in this case was the Debtors’ eligibility for Chapter 13. Pursuant to 11 U.S.C. § 109(e), only an individual with unsecured debts of less than $383,175 may be a debtor under Chapter 13. The Debtors scheduled over $800,000 in unsecured debt due to a deeply underwater mortgage. This unsecured debt also included a judgment lien which was found to be non-dischargeable in a previous bankruptcy. Debtors wanted the Court to define secured debt using the Dewsnup v. Timm, 502 U.S. 410 (1992), rationale resulting in the judgment lien as a secured debt and debtors falling below the unsecured debt ceiling in § 109(e). The Court declined to extend Dewsnup to Chapter 13 eligibility determinations. Furthermore, controlling 7th circuit precedent applied the § 506(a) test. Consequently, a debt is only secured for the purposes of Chapter 13 eligibility to the extent of the value of the collateral.
Statute/Rule References:
11 U.S.C. § 109(e)
Key Terms:
Eligibility for Chapter 13
Unsecured Debt Limit
Case Summary:
Prior to this bankruptcy filing, the Debtor was found liable on claims of unjust enrichment, wrongful conversion and breach of a fiduciary duty in state court. Once the Debtor filed bankruptcy, creditors from the state court action filed an adversary proceeding seeking to determine the dischargeability of their debt under 11 U.S.C. § 523(a)(2), (a)(4) and (a)(6). Despite the court’s recommendation, creditors relied on a theory of collateral estoppel and chose not to present any testimony. Creditors argued the Court should use the state court transcripts, in absence of sufficient findings of fact by the state court, to preclude the Debtor from defending this action. Finding the creditors’ theory lacked legal support, the Court dismissed the complaint.
Case Summary:
On remand from the District Court, the Bankruptcy Court had to determine if the Debtor committed a defalcation as defined by the Supreme Court in Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (2013). On the facts admitted and proved, it was extremely unlikely that the Debtor did not have actual knowledge of his construction company’s wrongdoing. His participation in the decision not to pay the creditor demonstrated his knowledge that his company had more debts than money to pay them. Thus, every time he received a commission from the sale of the house, he was alerted to the fact that all the subcontractors were not receiving full payment. Even if the Debtor did not have actual knowledge, he was consciously disregarding the risk that he was violating his fiduciary duty. Consequently, the Court found Debtor, as a fiduciary of a trust that existed by operation of Wisconsin's theft by contractors statute, committed a defalcation for purposes of 11 U.S.C. § 523(a)(4) where, even if he was not actively cognizant of wrongdoing, he consciously disregarded the substantial and unjustifiable risk that his conduct violated his fiduciary duty.
Chief Judge Catherine J. Furay
Case Summary:
The Court sustained the Chapter 7 trustee’s objection to Debtors’ claim of exemptions. The Debtors claimed an exemption in a dairy cooperative equity revolvement account under 11 U.S.C. § 522(d)(10)(E). The cooperative bylaws were clear that redemption of the Debtors’ equity was entirely within the discretion of the board of directors. Neither illness, disability, death, nor age would trigger redemption of the Debtors’ equity. Although the Debtors may have accumulated their patronage equity over time, the Court also determined they did not have a right to receive payment because of their length of service. This term connotes tenure, in the sense of plans conferring benefits based on the number of years of employment.
Statute/Rule References:
11 U.S.C. § 522(d)(10)(E) -- Federal Exemptions - Stock Bonus, Pension, Profitsharing, Annuity
Key Terms:
Exemptions
Case Summary:
The Court sustained the Chapter 7 Trustee’s objection to Debtors’ claim of exemptions. The Debtors claimed an exemption in two non-contiguous lots under Wis. Stat. § 815.20. Each lot was improved with a two-bedroom residence. The Debtors argued both lots constituted their homestead because they occupied one or another of the lots, and sometimes separated and occupied both simultaneously. The Court determined the lots taken together did not qualify as one homestead. Although a person may have multiple houses, only one is his home, and thus only one may qualify as a homestead. The Debtors also could not exempt the lots under a theory that each debtor had established a separate homestead, even if Wisconsin law permitted such an exemption. The Debtors had not separated with the intent to remain apart when they filed their bankruptcy petition.
Statute/Rule References:
Wis. Stat. § 815.20 -- Homestead Exemption
Wis. Stat. § 990.01(14)
Key Terms:
Exemptions
Homestead Exemption
Case Summary:
On summary judgment, collateral estoppel applied to render part of a state court judgment award nondischargeable under section 523(a)(4). The findings leading to the award established the defendant was a fiduciary. They also established she committed defalcation by retaining, commingling, and expending funds. As to whether the amount of the state court awards on the remaining claims were non-dischargeable, issues of fact remained, as necessary findings in the judgment did not satisfy the elements of sections 523(a)(2)(A), 523(a)(4), or 523(a)(6).
Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Embezzlement
Key Terms:
Collateral Estoppel
Defalcation while Acting as a Fiduciary
Dischargeability
Embezzlement
Fiduciary Capacity
Fraud - Fiduciary Capacity
Issue Preclusion
Nondischargeable Debt